EPA Guidance to Commercial and Industrial Lessees for CERCLA Liability Protection for Historic Contamination

The United States Environmental Protection Agency (EPA) recently issued revised guidance clarifying its position that commercial and industrial tenants can protect themselves from contamination liability under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or "Superfund") by relying on an “all appropriate inquiry” of the ownership and uses of the property, timely performed by the landlord, or by timely performing the all appropriate inquiry themselves. Under EPA’s prior guidance, it was unclear that these statutory defenses were available to tenants. CERCLA imposes strict, joint, and several liability on designated persons, including owners and operators of facilities, where there has been a release or threatened release of hazardous substances. Although the mere execution of a lease does not necessarily impose CERCLA sec. 107 liability, tenants leasing contaminated properties may fall within the “operator” liability designation even if the contamination occurred prior to the tenant’s use of the property. Tenants are also listed in the CERCLA sec. 101(40) definition of "bona fide prospective purchaser" ("BFPP"). CERCLA provides a liability defense to BFPPs who can meet certain requirements, including the making of an "all appropriate inquiry", ordinarily a Phase I environmental site assessment, prior to purchasing or leasing the property. This defense can protect against CERCLA liability at a site that has historical environmental contamination that was not caused by the tenant. Subject to certain conditions, the BFPP defense applies even when the inquiry reveals historical environmental contamination on the property to be purchased or leased.

Under EPA’s revised guidance, a tenant can have derivative BFPP protection by relying on the landlord’s all appropriate inquiry or by performing the all appropriate inquiry itself prior to commencing operations if the landlord failed to timely undertake it or has acted in a way to invalidate this protection. The new guidance indicates how EPA will exercise its enforcement discretion under CERCLA. It is important to note that EPA may still take enforcement action against a tenant if it is potentially liable for reasons other than its status as a tenant or where the owner is not in compliance with state or federal regulatory requirements or cleanup orders.

A prospective lessee of commercial or industrial property should determine if the owner or landlord of the property timely performed an all appropriate inquiry prior to its purchase of the property, where the inquiry, purchase and lease occurred after January 11, 2002. If not, the tenant may want to consider performing a Phase I environmental site assessment prior to entering into a lease to obtain protection from CERCLA liability claims.

A link to EPA’s guidance document is here: "Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision"

Risks of Fracking Gas Well Leases: "Homeowners and Gas Well Drilling: Boon or Bust"

Underscoring the risks of Marcellus Shale formation gas well leases that we discussed in our post of December 4, 2011 is an EcoWatch article posted yesterday by New York attorney Elisabeth Radow, "Homeowners and Gas Well Drilling: Boon or Bust."   It contains a thorough and extensive analysis of numerous issues relating to gas well drilling and leases for such activities and the risks for property owners who enter into such leases.  Accompanying the analysis are a series of photographs of actual well drilling sites by photographer J Henry Fair, best known for his Industrial Scars series, in which he "researches our world’s most egregious environmental disasters and creates images that are simultaneously stunning and horrifying". Mr. Fair’s work has been featured in national and international media and has been exhibited world wide. The article and photographs make for sobering reading and viewing for anyone who has entered into such a lease or is considering such a lease.  Property owners who may enter into such leases should be fully cognizant of the significant environmental and legal risks of these transactions.  This article provides valuable information on these issues.

Speaking of Lead Poisoning, EPA Finalizes New Rules on Air Pollution from Secondary Lead Smelters; Will Affect Exide Laureldale, PA Facility

Today's Federal Register contains the Environmental Protection Agency's new Clean Air Act rules on air pollution from secondary lead smelters.   The new rule, amending the 1997 National Emissions Standard for Hazardous Air Pollutants for secondary lead smelters, imposes more stringent emission limits for lead compounds, adds work practice standards for mercury emissions, and imposes new requirements for testing, monitoring and record keeping.   In promulgating the new rule, EPA "determined that the risks associated with emissions from this source category are unacceptable primarily due to fugitive emissions of lead." The timing of the issuance of this final rule is ironic, as the lead emission standards are ultimately based on the outdated and lax "level of concern" for lead poisoning that the CDC's Advisory Committee on Childhood Lead Poisoning voted yesterday to cut in half.  See our post of January 4, 2011.

Moreover, although the rule is generally effective immediately, the compliance date for the revised stack and fugitive lead emission standards at existing sources -- such as existing sources at the Exide facility in Laureldale, PA - won't be effective for another two years: January 6, 2014.

The Exide facility was recently featured in an investigative report by the Center for Public Integrity as one of America's "poisoned places."

Note: In 2000, our firm and our co-counsel at Williams, Cuker and Berezofsky (now, Williams Cedar) successfully concluded federal litigation on behalf of victims of environmental pollution from the Exide/General Battery Facility with a court decree which provided for the remediation of our clients' contaminated properties and future environmental compliance. We brought successful federal claims under the Clean Water Act, Clean Air Act and Resource Conservation and Recovery Act ("RCRA").  A copy of the court opinion on summary judgment cross-motions (LEAD Group, et al. v. Exide,  United States District Court, E.D. Pa., 1999) is here.  A copy of the consent decree is available upon request.

Chrin Landfill Agrees to Pay $114,00 DEP Fine for Odor & Air Violations

Chrin Brothers Sanitary Landfill has agreed to pay a $114,000 fine to the Pa. Department of Environmental Protection for odor, air pollution and waste management violations, according to an article in the Express-Times (Easton, PA).  It also agreed to withdraw an appeal of the fine which had been pending before the state Environmental Hearing Board. (We reported that appeal in our post of January 31.) In addition to paying the fine, Chrin also agreed to improve its waste and odor management practices. According to the article by reporter Colin McEvoy, "Chrin said the landfill will adopt new off-site odor-minimization procedures and implement twice-daily patrols to monitor the landfill perimeter for potential odors. The company will also instruct its haulers on proper management of particularly odorous loads to avoid problems during disposal, he said, and will deploy a rapid-response team to inspect those loads whenever they are accepted."  Chrin also agreed to give up any further appeal rights.

Chrin Brothers Landfill Appeals PADEP Fine for Air and Waste Violations

UPDATE:  Chrin Brothers has agreed to withdraw its appeal and to pay a fine of $114,000 and undertake new measures to minimize odors and air pollution problems. See our September 20, 2011 post.

Chrin Brothers, Inc. has appealed the December 28, 2009 fine of $187,500 imposed by the Pennsylvania Department of Environmental Protection (PADEP) for air pollution and waste management violations at its landfill. See our post of December 28, 2009 for more details on the landfill facility and the PADEP fine. As we noted in our post, appeals of PADEP civil penalty assessments are filed with the Environmental Hearing Board ("EHB"). 

Detailed information about the Chrin Landfill appeal can be followed at the EHB website case information page and the docket sheet for the appeal. Standard scheduling orders have been issued in the case.

EPA Releases 2009 Environmental Compliance Enforcement Action Record

EPA has released its 2009 Compliance Enforcement Actionsrecord. EPA's site also includes an interactive mapping tool which allows the public to search and identify federal environmental enforcement actions in any geographic area.  The site allows searches by environmental media (air, water, land and cross-media) and by location. Significant enforcement actions taken by EPA in 2009 in the Lehigh Valley included a multi-facility enforcement action against several Lehigh County municipal sewage facilities for sewer overflow violations. Also noteworthy was the criminal prosecution of Atlantic States Cast Iron Pipe Co., Phillipsburg, NJ in the longest federal trial in environmental crimes history. The corporation and four managers were convicted of engaging in an eight-year conspiracy to pollute the air and Delaware River in violation of the federal Clean Air and Clean Water Acts, expose its employees to dangerous conditions, and impede and obstruct federal regulatory and criminal investigations.In 2009 (FY), EPA concluded civil and criminal enforcement actions requiring polluters to invest an estimated $5.4 billion to reduce pollution, clean up contaminated land and water, achieve compliance and fund environmentally beneficial projects. Civil and criminal defendants committed to reduce pollution by approximately 570 million pounds annually once all required controls are fully implemented.

EPA's top Clean Air Act enforcement actions during FY 2009 reduced approximately 230 million pounds of sulfur oxides (SOx), nitrogen oxides (NOx) and particulate matter (PM) per year when all the required pollution controls are in place, resulting in estimated health benefits of between $4 billion to $9.8 billion. See more on civil enforcement.

In FY 2009, EPA opened 387 new environmental crime cases, the largest number of criminal case initiations in five years. EPA also launched the Fugitive Web Sitein fiscal year 2009, which assisted in the capture or surrender of five fugitives. See more on criminal enforcement.

EPA obtained $371 million from settlements with responsible parties to reimburse EPA for its past expenditures for cleaning up Superfund sites. This is the highest cost recovered ever for the Superfund program. See more on the Superfund program.

In FY 2009, EPA concluded 51 enforcement actions against federal agencies and federal facility contractors for alleged violations of environmental laws. These actions will prevent more than 13 million pounds of pollutants from being released into the environment. See more on federal facilities.

In addition, this year EPA began major initiatives to remediate pollution of the Chesapeake Bayand provide information about enforcement of the Clean Water Act, the Clean Air Actand the Resource Conservation and Recovery Act (RCRA).